China to Crack Down on Illegal Margin Trading After Lender Runs Off With Clients' Money

Xu Wei

DATE : Apr 17 2019/SOURCE : yicai

China to Crack Down on Illegal Margin Trading After Lender Runs Off With Clients' Money

(Yicai Global) April 17 -- China's top securities regulator will clamp down on illegal margin trading to curb risk in the capital market brought to light by the mysterious disappearance of Beigefu Technology, an unregistered margin lender that has reportedly made off with investors' funds.

The China Securities Regulatory Commission is highly concerned about the situation and will safeguard the legitimate rights and interests of investors as well as maintain market order, the watchdog said on its website. Margin financing platforms are not licensed to run a securities business, the CSRC said, adding that some may engage in criminal activities such as fraud with stock simulators.

The tightening grip comes on the heels of a vanishing trick performed by Beigefu Technology that offered loans for investors to trade stocks. Beigefu has no license to run a securities business upon investigation, the CSRC said.

Beigefu Technology suspended its margin financing business to comply with national policy, the Hainan province-based firm said in a statement on April 10, directing its clients to submit personal information to collect their funds. With no sight of their money, over 100 clients flagged the firm with authorities and police in Hainan froze its corporate accounts along with several personal ones, state-backed The Paper reported on April 15.

Investors should improve their risk awareness and steer clear of margin financing to avoid losses, the CSRC cautioned.